Mike D and AT&T Shareholders Push for Open Internet Policies

[This post is by FMC contributor Greg Capobianco]

It’s time for a proxy party. Get excited. Seriously.

Last week, the Securities and Exchange Commission (SEC) broke from its previous line of decisions and announced that telecommunications companies could no longer exclude proposals about net neutrality from shareholder proxy votes. The upshot is that those who own shares of telcos like AT&T, Verizon, and Sprint will have the opportunity to vote for the enforcement of an internal, self-regulating policy to support an open internet.

Specifically, the resolution would recommend that the companies “publicly commit to operate its wireless broadband network consistent with network neutrality principles.” Since the FCC’s Open Internet Order only applied to fixed-line providers and not mobile, this is kind of a big deal. It’s also interesting when you take into account recent Congressional efforts to strip the FCC’s authority to provide even the most basic consumer protections online.

Why should you care? Because musicians need to be able to compete on a level playing field online. Without basic rules for Internet Service Providers, we could see a world where independent artists, entrepreneurs and innovators could have their content slowed down — or worse, blocked outright — based on an ISP’s business or political preferences.

But back to the SEC decision. Internal enforcement through a shareholder vote is an alternative way to advance the principles of net neutrality without having anything to do with Congress, the FCC, or even the courts (which is where the latest challenge to the Open Internet Order is playing out). Still, it’s an approach that the telcos have been resistant to.

This might all sound wonky, but there’s another cool music connection.

Three AT&T investors in particular helped spearhead this initiative: the inimitable Mike D of the Beastie Boys, his filmmaker wife, Tamra Davis, as well as John Silva of Silva Artist Management. Together, they joined with Trillium Asset Management, a socially responsible investment firm, to ensure that the proposal made it onto shareholders’ proxy statements. We happen to share a friend with Trillium in Farnum Brown, who is a member of Future of Music Coalition’s Board of Directors.

“To the best of my knowledge this is the first net neutrality shareholder resolution to make it onto a publicly held company’s annual proxy ballot,” Farnum tells us. “While there is a balance to achieve, the management of these companies shouldn’t be able to prevent shareholders from raising important policy questions.”

Mike D et al. weren’t alone in asking the SEC for help in getting the resolution to a vote. Last year, Democratic Senators Al Franken of Minnesota and Ron Wyden of Oregon asked the SEC to change its mind after issuing its latest denial. This year, Franken again penned a letter to SEC Chair Mary Schapiro asking that the Commission decide differently. (Franken is a longtime champion of internet openness; check out his keynote at the 2009 Future of Music Policy Summit.)

One of the most important reasons why the telcos’ request for a no-action letter (essentially, permission from the SEC to exclude the net neutrality resolution) was rejected this year is because the SEC now considers net neutrality to be a “significant policy consideration.” Why it wasn’t significant last year, or the year before, is a mystery to us.

Farnum has a few insights. “I think it just took a while being in the air,” he says. “It’s something that more and more people are talking about.”

We’ve thought net neutrality has been a big deal since 2007, when we launched our Rock the Net campaign with thousands of artists and independent labels from every conceivable genre and background. We’re psyched that this chord is still ringing loud and clear.

Although it’s plausible that the telcos will challenge the SEC’s determination in court, Farnum doesn’t foresee a delay in the vote. “We expect to be on the ballot,” he says. “We are interested in engaging in this discussion.”

If past is prologue, AT&T’s annual shareholder meeting will be on the last Friday in April. Of course, even with the resolution up for a vote, a positive outcome is by no means assured. Similarly, it wouldn’t be surprising if the AT&T board recommends that shareholders vote against this proposal, but we’ll just have to wait and see.

Regardless of outcome, we applaud Farnum and associates for being heroic and nudging telecommunications companies towards policies that benefit all users, and not just the few.